Key reasons suggest that the Bitcoin bull run will not commence until late 2024
The cryptocurrency market has recently experienced significant volatility, with Bitcoin (BTC) facing resistance at the $70,000 mark. Investor sentiment shifted from optimism to caution, leading to a period of consolidation for Bitcoin, hovering above $63,000. QCP Capital predicts that this consolidation will continue for the next two months, with a potential bull run not expected until late 2024. Despite some positive developments, the price action remains weak, with BTC trading as low as $64,300.
QCP Capital expects Bitcoin’s price to remain constrained in the near term. Trading activity shows substantial selling of Bitcoin call options set to expire next month, indicating that traders do not anticipate significant price movement in the immediate future. However, there has been aggressive buying of call options for September through December, suggesting that investors anticipate major price movements later in the year. This behavior reflects a belief in summer consolidation followed by significant market movements around the US elections, which historically lead to volatility in financial markets.
Miners have been under pressure to sell due to high breakeven prices following the recent Bitcoin halving. This selling pressure is expected to continue, delaying any significant price recovery. Miner BTC holdings have reached their lowest levels in 14 years, with total reserves decreasing by over 50,000 BTC since the start of the year. Additionally, over-the-counter selling activity has surged. This reduction in miner holdings indicates a continuous supply of Bitcoin entering the market, suppressing price growth.
The market has also been unsettled by reports of a new large supply of Bitcoin entering the market. The German government recently sold 3,000 BTC and plans to offload an additional 47,000 BTC in the coming days. This unexpected influx of Bitcoin has added downward pressure on the price, potentially creating panic or a rush to sell, further depressing prices.
The exchange-traded funds (ETFs) market has also seen continuous sell-off pressure. Spot Bitcoin ETFs have experienced outflows of over $500 million in the past week, suggesting a lack of confidence among institutional investors who are waiting for clearer signs of a price reversal before re-entering the market. Institutional sell-offs can exacerbate price declines and delay recovery.
Despite the bearish sentiment, there have been positive developments contributing to a bullish outlook for Bitcoin. MicroStrategy recently purchased 11,931 BTC valued at approximately $800 million, and BitMEX CEO Arthur Hayes has suggested that the current Japanese banking crisis could trigger a BTC bull run. Such endorsements and significant investments can boost market confidence.
At present, Bitcoin is trading at $64,240, with a 0.79% gain in the last 24 hours and a 3% drop over the past seven days. While a delayed Bitcoin bull run is anticipated by the end of the year, analysts predict that the consolidation phase may last until September 2024. Historical data suggests that after an initial drop, Bitcoin often enters a consolidation phase lasting up to 150 days, which is crucial for stabilizing the market and setting the stage for the next bullish breakout.
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